DoD's $15.9M IT services contract to Chugach McKinley, Inc. awarded without competition

Contract Overview

Contract Amount: $15,930,825 ($15.9M)

Contractor: Chugach Mckinley, Inc.

Awarding Agency: Department of Defense

Start Date: 2004-10-18

End Date: 2011-12-31

Contract Duration: 2,630 days

Daily Burn Rate: $6.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Place of Performance

Location: ANCHORAGE, ANCHORAGE County, ALASKA, 99503

State: Alaska Government Spending

Plain-Language Summary

Department of Defense obligated $15.9 million to CHUGACH MCKINLEY, INC. for work described as: Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Long contract duration of 2630 days suggests a need for sustained IT support. 3. The 'Cost Plus Fixed Fee' pricing structure can incentivize cost overruns. 4. Performance location in Alaska may indicate specialized regional IT needs. 5. Lack of competition raises questions about the government securing the best value. 6. The contract's value is substantial, requiring careful oversight of expenditures.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of publicly available comparable sole-source IT services contracts. The 'Cost Plus Fixed Fee' (CPFF) structure, while common for complex or uncertain scope work, carries inherent risks of cost escalation. Without competitive bidding, it's difficult to definitively assess if the fixed fee and cost reimbursement represent a fair market price. The total value of over $15.9 million over its duration suggests a significant investment, and the absence of competition means the government did not benefit from market forces to drive down costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source is available or capable of meeting the government's needs. The lack of competition means that multiple bidders were not considered, and the government did not have the opportunity to evaluate various proposals and pricing structures. This can limit the government's ability to negotiate the most favorable terms and prices.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competitive pressure. Without competing offers, the government cannot be certain it received the lowest possible price for the required IT services.

Public Impact

The primary beneficiary is the Department of Defense, which receives essential computer facilities management services. Services delivered include maintaining and managing IT infrastructure, ensuring operational continuity for defense operations. The geographic impact is concentrated in Alaska (AK), suggesting a focus on supporting military installations or operations in that region. The contract supports a workforce, likely including both government personnel and contractor employees, to deliver these specialized IT services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value assessment.
Cost-plus fee structure can lead to cost overruns if not managed tightly.
Long contract duration increases exposure to potential inefficiencies over time.
Lack of transparency in the justification for sole-source award.

Positive Signals

Contract provides critical IT services to a government agency.
Chugach McKinley, Inc. has a long-standing relationship with the government, potentially indicating reliability.
The contract specifies a fixed fee component, providing some level of cost predictability.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer facilities management services. The IT services market is highly competitive, with numerous providers offering a wide range of solutions. However, specialized or geographically constrained requirements, as potentially indicated by the Alaska location, can sometimes lead to sole-source awards. The overall IT services market for the federal government is substantial, with significant spending across various agencies for infrastructure, software, and support.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. The prime contractor, Chugach McKinley, Inc., is likely a larger entity. There is no explicit information regarding subcontracting plans for small businesses within this data. Therefore, the direct impact on the small business ecosystem from this specific contract is likely minimal, unless the prime contractor voluntarily engages small businesses for support.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures would be embedded in the contract's terms and conditions, including performance standards and reporting requirements. Transparency is limited due to the sole-source nature of the award, but contract award data is publicly available. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

IT Infrastructure Management Services
Computer Systems Design Services
Defense Information Technology Support
Alaska Regional IT Contracts
Cost-Plus Fixed Fee IT Contracts

Risk Flags

Sole-source award
Cost-plus pricing structure
Long contract duration
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.9 million to CHUGACH MCKINLEY, INC.. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is CHUGACH MCKINLEY, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $15.9 million.

What is the period of performance?

Start: 2004-10-18. End: 2011-12-31.

What is the track record of Chugach McKinley, Inc. with federal contracts, particularly in IT services?

Chugach McKinley, Inc. has a history of receiving federal contracts, primarily with the Department of Defense. While specific details on their IT service performance across all contracts are not fully detailed in this data snippet, their ability to secure and maintain contracts, including this long-term sole-source award, suggests a level of established capability and a relationship with the agency. Further analysis would involve examining past performance reviews, contract modifications, and any documented issues or successes on previous engagements to fully assess their track record in delivering computer facilities management services.

How does the 'Cost Plus Fixed Fee' (CPFF) pricing structure compare to other contract types for similar IT services?

The CPFF structure is often used when the scope of work is not precisely defined or is expected to change, allowing for flexibility. However, it differs significantly from fixed-price contracts, where the contractor agrees to a set price regardless of actual costs. In a CPFF contract, the government reimburses the contractor's allowable costs plus a predetermined fixed fee representing profit. This can be advantageous for the government if costs are lower than anticipated, but it also carries the risk of cost overruns if the contractor's expenses are higher than projected. For IT services with well-defined scopes, fixed-price contracts often provide better value certainty for the government.

What are the primary risks associated with a sole-source award for IT services?

The primary risks associated with a sole-source award for IT services include a lack of price competition, which can lead to higher costs for the government compared to a competitively awarded contract. There's also a reduced incentive for the contractor to innovate or improve efficiency once the award is secured, as there's no direct market pressure from competitors. Furthermore, it can limit the government's access to a broader range of technological solutions or specialized expertise that might be available from other vendors. Finally, sole-source awards can sometimes raise concerns about fairness and transparency in the procurement process.

What is the historical spending trend for Computer Facilities Management Services (NAICS 541513) by the Department of Defense?

Historical spending data for NAICS 541513 (Computer Facilities Management Services) by the Department of Defense is substantial and generally shows a consistent demand for these services. While specific year-over-year trends for this exact contract are not provided, the DoD is a major consumer of IT services, including facilities management, to support its vast operational infrastructure. Spending in this category often fluctuates based on modernization efforts, base realignments, and evolving technological requirements. Analyzing broader DoD IT spending patterns would reveal significant investment in maintaining and upgrading its computing environments.

How does the contract duration of over 7 years impact the assessment of value for money?

A contract duration of over 7 years (2630 days) for IT services presents a mixed picture for value for money. On one hand, a longer duration can provide stability and continuity for critical IT operations, reducing the administrative burden and potential disruption associated with frequent re-procurements. It can also allow the contractor to invest in specialized knowledge and infrastructure. However, it also extends the period during which the government is committed to a particular vendor and pricing structure, potentially locking in higher costs if market rates decrease or if the contractor's performance is suboptimal. The CPFF structure further amplifies this risk, as costs can escalate over the extended term without the benefit of competitive re-evaluation.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Facilities Management Services

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Chugach Alaska Corporation (UEI: 071844021)

Address: 560 E 34TH AVE, ANCHORAGE, AK, 99503

Business Categories: 8(a) Program Participant, Category Business, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline